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FIRST DIVISION
DAVID A. RAYMUNDO,
Petitioner,
-versus-
GALEN REALTY AND MINING
CORPORATION,
Respondent.
G.R. No. 191594
Present:
SERENO, C.J.,
Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
VILLARAMA, JR., and
REYES,JJ.
Promulgated:
x-------------------------------------------------------------------------- -------------x
DECISION
REYES,J.:
Assailed in the present Petition for Review on Certiorari under Rule
45
1
of the Rules of Court is the Decision
2
dated October 30, 2009 and
Resolution
3
dated March 10, 2010 of the Court of Appeals (CA) in CA-G.R.
SP No. 105401, which dismissed petitioner David A. Raymundo's
(Raymundo) special civil action for certiorari for lack of merit.
Facts of the Case
Civil Case No. 18808 is an action for Reconveyance with Damages
filed by respondent Galen Realty and Mining Corporation (yalen) against
Raymundo and Tensorex Corporation (Tensorex). Subject ofthe case was a
Rollo, pp. 11-39.
2
Penned by Associate Justice Portia Alifio-Hormachuelos (retired), with Associate Justices
Fernanda Lampas Peralta and Ramon R. Garcia, concurring; id. at 44-61.
3
Id. at 63-64.
i
Decision 2 G.R. No. 191594



transaction between Galen and Raymundo over a house and lot located in
Urdaneta Village, Makati City originally covered by Transfer Certificate of
Title (TCT) No. S-105-651 in the name of Galen. By virtue of a Deed of
Sale dated September 9, 1987 executed between Galen and Raymundo, title
to the property was transferred to the latter, who later on sold the property to
Tensorex, which caused the issuance of TCT No. 149755 in its name.

In a Decision dated April 12, 2000, the Regional Trial Court (RTC) of
Makati City, Branch 62, in Civil Case No. 18808, ruled that the transaction
between Raymundo and Galen was actually an equitable mortgage.
4
On
appeal, the CA upheld the RTC decision but modified the loan obligation of
Galen and reduced the same to P3,865,000.00. The dispositive portion of
the CA Decision
5
dated May 7, 2004 provides:

WHEREFORE, PREMISES CONSIDERED, the Assailed
Decision is hereby MODIFIED as follows:

V) the Deed of Absolute Sale between plaintiff-
appellant and defendant-appellant David Raymundo
is declared null and void, being a Deed of Equitable
Mortgage;

VI) the Deed of Sale between defendant-appellant
David Raymundo and defendant-appellant Tensorex
[is] declared null and void;

VII) defendant-appellant David Raymundo to
reconvey the subject property to plaintiff-
appellants [sic] upon plaintiff-appellant[s]
payment to defendant-appellant David
Raymundo of [P]3,865,000.00 plus legal interest
thereon from the date of filing of the complaint,
until it is fully paid, or if reconveyance is no
longer feasible, for defendants-appellants
Raymundo and Tensorex to solidarily pay
plaintiff-appellant the fair market value of the
subject property by expert appraisal;

VIII) defendants-appellants Raymundo and Tensorex to
solidarily pay plaintiff-appellant, as follows:
a) [P]100,000.00 in exemplary damages;
b) [P]100,000.00 in attorneys fees;
c) Cost[s] of suit.

Defendants-appellants COUNTERCLAIM is hereby
DISMISSED.

SO ORDERED.
6
(Emphasis ours)

4
See CA Decision dated May 7, 2004 in CA-G.R. CV No. 68294; id. at 75-90.
5
Penned by Associate Justice Andres B. Reyes, Jr., with Associate Justices Danilo B. Pine and
Edgardo F. Sundiam, concurring; id.
6
Id. at 89-90.
Decision 3 G.R. No. 191594




Said CA decision eventually became final and executory on January
11, 2005, and entry of judgment was made.
7


Galen moved for the execution of the CA decision, submitting that the
writ of execution should order Raymundo and Tensorex to solidarily pay the
following: (1) the current fair market value of the property less Galens
mortgage debt of P3,865,000.00 with legal interest; and (2) the award of
damages and costs of suit. Raymundo and Tensorex opposed the motion,
arguing that the CA decision provides for two alternatives one, for
Raymundo to reconvey the property to Galen after payment of
P3,865,000.00 with legal interest or, two, if reconveyance is no longer
feasible, for Raymundo and Tensorex to solidarily pay Galen the fair market
value of the property.
8


In its Order
9
dated February 3, 2006, the RTC granted Galens motion
and ordered the issuance of a writ of execution. The property (land and
improvements) was appraised by Asian Appraisal, Inc. at P49,470,000.00.
10

Subsequently, the appointed special sheriff issued a Notice of
Reconveyance/Notice of Demand to Pay
11
on March 8, 2007. The sheriff
also issued on April 4, 2007 a Notice of Levy on Execution
12
to the Register
of Deeds of Makati City over the rights and interest of Tensorex over the
property, including all buildings and improvements covered by TCT No.
149755.

On July 16, 2007, the special sheriff issued a Notice of Sheriffs Sale
of Real Estate Property,
13
stating that the total outstanding balance of
mortgage indebtedness as of January 25, 1988 and interest for 225 months
with 2.25% interest is [P]37,108,750.00 plus costs x x x,
14
and sale at
public auction was set on August 8, 2007. Raymundo filed a Manifestation
and Urgent Motion
15
objecting to the auction sale and expressing his
willingness to reconvey the property upon payment in full by Galen of its
indebtedness. Galen filed a Counter Manifestation and Opposition
16

claiming that reconveyance is no longer feasible as the property is heavily
encumbered and title to the property is still in the name of Tensorex which
had already gone out of operations and whose responsible officers are no
longer accessible.


7
Id. at 92.
8
Id. at 97.
9
Id. at 97-98.
10
Id. at 96.
11
Id. at 99.
12
Id. at 100.
13
Id. at 101-102.
14
Id.
15
Id. at 103-108.
16
Id. at 185-188.
Decision 4 G.R. No. 191594



Raymundo also submitted on August 6, 2007 a duplicate copy of the
Cancellation of the Real Estate Mortgages
17
over the property. As regards
the other entries on the title, Raymundo stated that these do not affect his
rights, interests and participation over the property as the Notice of Lis
Pendens of Civil Case No. 18808 inscribed on September 27, 1990 was
superior to these entries.
18
On the same date, the RTC issued an Order
19

noting Raymundos motions, ordering him to show proof how his
willingness to reconvey the property can be realized, and holding the auction
sale in abeyance. The order also provided that [c]ompliance herein is
enjoined x x x, which proof shall consist primarily of a submission of the
Transfer Certificate of Title covering the subject property duly registered in
Raymundos name.
20


Raymundo filed a Compliance/Comment
21
to the RTCs order,
contending that his obligation to reconvey is not yet due pending payment of
Galens own obligation.

On December 12, 2007, the RTC issued an Order
22
lifting the
suspension of the auction sale and directing Galen to coordinate with the
deputy sheriff for the enforcement of the decision. The RTC ruled that
Raymundo failed to show proof that the title was already registered in his
name and thus, it resolves to deny his compliance/comment.

Raymundo filed a Motion for Reconsideration
23
of the RTCs order
but it was denied per Order
24
dated August 15, 2008. As a result, the
property was sold at a public auction on November 26, 2008 for
P37,108,750.00, with Galen as the highest bidder, and a certificate of sale
25

was issued by the sheriff.

Raymundo then filed a special civil action for certiorari with the CA.
In the assailed Decision
26
dated October 30, 2009, the petition was dismissed
for lack of merit. His motion for reconsideration having been denied in the
assailed CA Resolution
27
dated March 10, 2010, Raymundo is now seeking
recourse with the Court on petition for review under Rule 45 of the Rules of
Court.


17
Id. at 114.
18
Id. at 111-113.
19
Id. at 109-110.
20
Id. at 110.
21
Id. at 115-120.
22
Id. at 130-131.
23
Id. at 132-136.
24
Id. at 137-138.
25
Id. at 139-140.
26
Id. at 44-61.
27
Id. at 63-64.
Decision 5 G.R. No. 191594



Raymundo contends that the CA committed an error in upholding the
validity of RTCs writ of execution. He argues that the writ changed the
tenor of the final and executory CA decision as his obligation under said
decision is to reconvey the property upon Galens payment of its obligation.
Raymundo also argues that the sale on public auction of the property was
void inasmuch as the RTCs conclusion, as affirmed by the CA, that
reconveyance is no longer feasible has no basis.
28


Galen, on the other hand, claims that Raymundo was given the option
to choose between reconveyance and payment of the fair market value of the
property but did not manifest his choice. It was only when the property was
set for sale at public auction that Raymundo manifested his choice of
reconveyance, which was opposed by Galen because by that time, the
property was still in the name of Tensorex and was already heavily
encumbered.
29
Galen maintains that the writ of execution and the auction
sale was valid inasmuch as payment of the fair market value of the property
is the only feasible way to satisfy the judgment.

Ruling of the Court

The manner of execution of a final judgment is not a matter of
choice. It does not revolve upon the pleasure or discretion of a party as to
how a judgment should be satisfied, unless the judgment expressly provides
for such discretion. Foremost rule in execution of judgments is that a writ
of execution must conform strictly to every essential particular of the
judgment promulgated, and may not vary the terms of the judgment it seeks
to enforce, nor may it go beyond the terms of the judgment sought to be
executed.
30
As a corollary rule, the Court has clarified that a judgment is
not confined to what appears on the face of the decision, but extends as well
to those necessarily included therein or necessary thereto.
31


In this case, the writ of execution issued by the RTC originated from
Civil Case No. 18808, which is an action for Reconveyance with Damages
filed by Galen against Raymundo and Tensorex, where Galen sought
recovery of the property subject of the Deed of Absolute Sale between Galen
and Raymundo. The RTC ruled in favor of Galen, finding that the
transaction between them is an equitable mortgage, which was affirmed by
the CA. Both the RTC and the CA, in the dispositive portions of their
respective decisions, ordered Raymundo to reconvey the subject property

28
Id. at 33-37.
29
Id. at 168-169.
30
Tumibay v. Soro, G.R. No. 152016, April 13, 2010, 618 SCRA 169, 175-176, citing Mahinay v.
Asis, G.R. No. 170349, February 12, 2009, 578 SCRA 562, 574 and Ingles v. Cantos, 516 Phil. 496, 506
(2006); B.E. San Diego, Inc. v. Alzul, 551 Phil. 841 (2007).
31
Tumibay v. Soro, id. at 176, citing DHL Philippines Corp. United Rank and File Asso. Federation
of Free Workers v. Buklod ng Manggagawa ng DHL Philippines Corp., 478 Phil. 842, 853 (2004) and
Jaban v. CA, 421 Phil. 896, 904 (2001).
Decision 6 G.R. No. 191594



to [Galen] upon [Galens] payment to x x x Raymundo x x x plus legal
interest thereon from the date of [the] filing of the complaint, until it is fully
paid, or if reconveyance is no longer feasible, for x x x Raymundo and
Tensorex to solidarily pay [Galen] the fair market value of the subject
property by expert appraisal.
32
In implementing said judgment, the RTC
should have considered the nature of the agreement between Galen and
Raymundo. The rule is that in case of ambiguity or uncertainty in the
dispositive portion of a decision, the body of the decision may be scanned
for guidance in construing the judgment.
33


Nevertheless, the import of the dispositive portion of the CA Decision
dated May 7, 2004 is clear. The principal obligation of Raymundo under the
judgment is to reconvey the property to Galen; on the other hand, Galens
principal obligation is to pay its mortgage obligation to Raymundo.
Performance of Raymundos obligation to reconvey is upon Galens
payment of its mortgage obligation in the amount of P3,865,000.00 plus
legal interest thereon from the date of the filing of the complaint, until fully
paid. This is in accord with the nature of the agreement as an equitable
mortgage where the real intention of the parties is to charge the real property
as security for a debt.
34
It was wrong for the RTC to require Raymundo to
show proof of his willingness to reconvey the property because as stressed
earlier, their agreement was an equitable mortgage and as such, Galen
retained ownership of the property.
35
In Montevirgen, et al. v. CA, et al.,
36

the Court was emphatic in stating that the circumstance that the original
transaction was subsequently declared to be an equitable mortgage must
mean that the title to the subject land which had been transferred to private
respondents actually remained or is transferred back to [the] petitioners
herein as owners-mortgagors, conformably to the well-established doctrine
that the mortgagee does not become the owner of the mortgaged property
because the ownership remains with the mortgagor.
37
Thus, it does not
devolve upon Raymundo to determine whether he is willing to reconvey the
property or not because it was not his to begin with. If Raymundo refuses to
reconvey the property, then the court may direct that the act be done by some
other person appointed by it as authorized by Section 10 of Rule 39 of the
Rules of Court, to wit:

Sec. 10. Execution of judgments for specific act. (a) conveyance,
delivery of deeds, or other specific acts; vesting title.If a judgment
directs a party to execute a conveyance of land or personal property, or to
deliver deeds or other documents, or to perform any other specific act in
connection therewith, and the party fails to comply within the time
specified, the court may direct the act to be done at the cost of the

32
Rollo, p. 48.
33
Pastor, Jr. et al. v. CA, et al., 207 Phil. 758, 767 (1983).
34
Muoz, Jr. v. Ramirez, G.R. No. 156125, August 25, 2010, 629 SCRA 38, 51.
35
Roberts v. Papio, 544 Phil. 280, 300-301 (2007).
36
198 Phil. 338 (1982).
37
Id. at 348, citing CIVIL CODE, Article 2088.
Decision 7 G.R. No. 191594



disobedient party by some other person appointed by the court and
the act when so done shall have like effect as if done by the party. If
real or personal property is situated within the Philippines, the court in lieu
of directing a conveyance thereof may by an order divest the title of any
party and vest it in others, which shall have the force and effect of a
conveyance executed in due form of law. (Emphasis and underscoring
ours)

The some other person appointed by the court can be the Branch
Clerk of Court,
38
the Sheriff,
39
or even the Register of Deeds,
40
and their acts
when done under such authority shall have the effect of having been done by
Raymundo himself. A party cannot frustrate execution of a judgment for a
specific act on the pretext of inability to do so as the Rules provide ample
means by which it can be satisfied.

Conversely, Galens obligation to pay the mortgage obligation is not
subject to Raymundos reconveyance of the property. If Galen refuses to
pay, it is only then that the court may direct the foreclosure of the mortgage
on the property and order its sale at public auction to satisfy Galens
judgment debt against Raymundo, pursuant to Rule 68 of the Rules of Court
on Foreclosure.
41
If Raymundo, meanwhile, unjustly refuses to accept
Galens payment, the latters remedy is to consign the payment with the
court in accordance with the Civil Code provisions on consignment.

It is only when reconveyance is no longer feasible that Raymundo
and Tensorex should pay Galen the fair market value of the property.
In other words, it is when the property has passed on to an innocent
purchaser for value and in good faith, has been dissipated, or has been
subjected to an analogous circumstance which renders the return of the
property impossible that Raymundo and/or Tensorex, is obliged to pay Galen
the fair market value of the property.

In this case, it appears that the RTC accommodated Galens choice of
payment of the fair market value of the property and it became the main
obligation of Raymundo as well as Tensorex instead of being the alternative.
Worse, it even considered the subject property as absolutely owned by
Tensorex and levied upon the same to satisfy payment of the fair market
value of the very property that has only been pledged as security of Galens
loan. While it indeed appears that Raymundo was able to transfer title of the
property to Tensorex, it should be noted that the latter is a party to Civil Case
No. 18808 and is necessarily bound by the judgment. The dissolution of
Tensorex is not a valid reason to avoid reconveyance inasmuch as the court

38
See Balais-Mabanag v. Register of Deeds of Quezon City, G.R. No. 153142, March 29, 2010, 617
SCRA 1, 10.
39
Tumibay v. Soro, supra note 30, at 178-179, citing Buag v. CA, 363 Phil. 216 (1999).
40
Cruz v. Court of Appeals, 459 Phil. 264, 282 (2003).
41
Spouses Rosales v. Spouses Suba, 456 Phil. 127, 133 (2003).
Decision 8 G.R. No. 191594



may order the transfer of title to Galen by some other person appointed by
the court in accordance with Section 10, Rule 39 of the Rules of Court.

The existence of subsequent encumbrances on the property is also not
a sufficient ground to insist on the payment of its fair market value. To
begin with, it was Galen which sought the return of the property by filing the
civil case. Moreover, as correctly pointed out by Raymundo, whatever
transactions Tensorex entered into is subject to the notice of lis pendens
which serves as a constructive notice to purchasers or other persons
subsequently dealing with the same property.
42
Further, having Raymundo
and/or Tensorex keep the property (and later on levy upon the same) and
order the payment of its fair market value virtually amounts to a sale, which
goes against the RTC and CAs conclusion that the transaction subject of
Civil Case No. 18808 is not a sale but an equitable mortgage. It also violates
the very public policy that prohibits pactum commissorium.
43
In the early
case of Guanzon v. Hon. Argel,
44
which also involves an equitable mortgage,
the Court ruled

In no way can the judgment at bar be construed to mean that
should the Dumaraogs fail to pay the money within the specified period
then the party would be conveyed by the Sheriff to Guanzon. Any
interpretation in that sense would contradict the declaration made in the
same judgment that the contract between the parties was in fact a
mortgage and not a pacto de retro sale. x x x The mortgagors default does
not operate to vest in the mortgagee the ownership of the encumbered
property, for any such effect is against public policy, as enunciated by the
Civil Code. The court can not be presumed to have adjudged what
would be contrary to law, unless it be plain and inescapable from its
final judgment. No such purport appears or is legitimately inferable
from the terms of the judgment aforequoted. x x x.
45
(Citation omitted
and emphasis ours)

The RTC, therefore, committed grave abuse of discretion in ordering
the payment of the fair market value of the subject property despite the fact
that reconveyance is still feasible under the circumstances of this case.
Consequently, the CA committed a reversible error in sustaining the assailed
RTC orders and in dismissing Raymundos special civil action for certiorari
for lack of merit.

In Muoz v. Ramirez,
46
the Court stated:

42
Mahinay v. Gako, Jr., G.R. No. 165338, November 28, 2011, 661 SCRA 274, 297, citing Yu v. CA,
321 Phil. 897, 901 (1995).
43
Article 2088 of the CIVIL CODE provides that [t]he creditor cannot appropriate the things given by
way of pledge or mortgage, or dispose of them. Any stipulation to the contrary is null and void. See also
Briones-Vasquez v. Court of Appeals, 491 Phil. 81, 94-95 (2005), which ruled that the principle of pactum
commissorium is applicable to equitable mortgages.
44
144 Phil. 418 (1970).
45
Id. at 423-424.
46
G.R. No. 156125, August 25, 2010, 629 SCRA 38.
Decision 9 G.R. No. 191594




In Lustan v. CA, where we established the reciprocal obligations of
the parties under an equitable mortgage, we ordered the reconveyance of
the property to the rightful owner therein upon the payment of the loan
within 90 days from the finality of this decision.
47
(Emphasis ours)

Before concluding, the Court notes that under the final and executory
CA Decision dated May 7, 2004, Galen was adjudged to pay Raymundo the
sum of P3,865,000.00 with legal interest from the date of the filing of the
complaint until fully paid. Raymundo, meanwhile, was ordered to pay
damages, attorneys fees and costs of suit.

In Sunga-Chan v. Court of Appeals,
48
the Court, citing Eastern
Shipping Lines, Inc. v. Court of Appeals,
49
reiterated the rule on the rates and
application of interests, viz:

Eastern Shipping Lines, Inc. synthesized the rules on the
imposition of interest, if proper, and the applicable rate, as follows: The
12% per annum rate under CB Circular No. 416 shall apply only to
loans or forbearance of money, goods, or credits, as well as to
judgments involving such loan or forbearance of money, goods, or
credit, while the 6% per annum under Art. 2209 of the Civil Code
applies when the transaction involves the payment of indemnities in
the concept of damage arising from the breach or a delay in the
performance of obligations in general, with the application of both
rates reckoned from the time the complaint was filed until the [adjudged]
amount is fully paid. In either instance, the reckoning period for the
commencement of the running of the legal interest shall be subject to the
condition that the courts are vested with discretion, depending on the
equities of each case, on the award of interest.

Otherwise formulated, the norm to be followed in the future on the
rates and application thereof is:

x x x x

II.With regard particularly to an award of interest in the
concept of actual and compensatory damages, the rate of
interest, as well as the accrual thereof, is imposed, as
follows:

1. When the obligation [is] breached[, and it]
consists in the payment of a sum of money, i.e., a loan or
forbearance of money, the interest due should be that which
may have been stipulated in writing. Furthermore, the
interest due shall itself earn legal interest from the time it is
judicially demanded. In the absence of stipulation, the

47
Id. at 54, citing Lustan v. CA, 334 Phil. 609, 620 (1997). See also Bacungan v. CA, G.R. No.
170282, December 18, 2008, 574 SCRA 642, 650.
48
578 Phil. 262 (2008).
49
G.R. No. 97412, July 12, 1994, 234 SCRA 78.
Decision 10 G.R. No. 191594



rate of interest shall be 12% per annum to be computed
from default, i.e., from judicial or extrajudicial demand
under and subject to the provisions of Article 1169 of
the Civil Code.

x x x x

3. When the judgment of the court awarding a
sum of money becomes final and executory, the rate of
legal interest, whether the case falls under paragraph 1
or paragraph 2, above, shall be 12% per annum from
such finality until its satisfaction, this interim period
being deemed to be by then an equivalent to a forbearance
of credit.
50
(Citations omitted and emphases and
underscoring ours)

Recently, the Monetary Board of the Bangko Sentral ng Pilipinas
issued Resolution No. 796 dated May 16, 2013, revising the interest rate to
be imposed for the loan or forbearance of any money, goods or credits, in the
absence of an express contract, to six percent (6%) per annum. This was
implemented by BSP Circular No. 799 dated June 21, 2013 and effective
July 1, 2013.

Applying the foregoing guidelines, the following rates are to be
imposed on the parties respective obligations:

(a) Galens mortgage indebtedness shall earn interest at
the rate of 12% per annum from the date of the filing of the
complaint on January 25, 1988
51
until June 30, 2013; thereafter,
it shall earn six percent (6%) interest per annum until fully
paid. The Court is constrained to retain the application of the
interest rate from the filing of the complaint until full payment
because the CAs judgment on this score has already attained
finality and cannot be disturbed at this stage;
52
and

(b) The damages, attorneys fees and costs to be paid by
Raymundo shall earn interest at the rate of six percent (6%) per
annum from the date of finality of the CA Decision on May 7,
2004 until fully paid.

WHEREFORE, the petition is GRANTED. The Decision dated
October 30, 2009 and Resolution dated March 10, 2010 of the Court of
Appeals in CA-G.R. SP No. 105401 are REVERSED and SET ASIDE.
Accordingly, the assailed Orders dated August 6, 2007, December 12, 2007

50
Supra note 48, at 276-278.
51
Rollo, p. 47.
52
See Penta Capital Corporation v. Bay, G.R. No. 162100, January 18, 2012, 663 SCRA 192, 213-
214.
Decision 11 G.R. No. 191594
and August 15, 2008 of the Regional Trial Court of Makti City, Branch 62,
as well as the writ of execution dated January 1 0, 2007 and all other orders,
writs and processes issued pursuant thereto are NULLIFIED.
The RTC of Makati City, Branch 62 is DIRECTED to implement the
Decision dated May 7, 2004 of the Court of Appeals in accordance with this
Decision, and subject to the interest rates discussed herein.
SO ORDERED.
WE CONCUR:
Associate Justice
MARIA LOURDES P. A. SERENO
Chief Justice
Chairperson
!.11 lA .h . . R. "'- A A / ) ~ h ~
f E ~ ~ J.UON'Aii'no-DE CASTRO
Associate Justice
! kcision 11 < i.R. No. 191594
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that
the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court's
Division.
MARIA LOURDES P. A. SERENO
Chief Justice
..